The Calcutta High Court ruled that tea saplings not liable to tax under the Bengal Agriculture Income Tax Act, 1944.
The writ petition has been filed praying to quash the impugned order passed by the West Bengal Taxation Tribunal, Kolkata. The petitioner has also sought relief for a direction to the respondents to calculate depreciation in accordance with Section 7A of the Bengal Agricultural Income Tax Act, 1944 and not under Section 7 thereof.
The Assessing Officer sought to levy tax on sale of saplings and computed depreciation in accordance with Section 7 of the Act of 1944 read with Rule 3 of the Bengal Agricultural Income Tax Rules, 1944. According to the petitioner assessee “tea saplings” is not “tea” and as such in view of charging Section 3 of the Bengal Agricultural Income Tax Act, no tax could be levied on the income derived from sale of saplings.
The counsel for the petitioner argued that as per charging Section 3 of the Bengal Agricultural Income Tax Act, only income from “tea” is taxable and, therefore, the tribunal has committed a manifest error of law to uphold the imposition of tax on tea saplings. The word “tea” has not been defined under the Act, although it is defined under the Tea Act, 1953 ( Central Act ) which also does not include tea saplings. Therefore, the imposition of tax on income derived from tea saplings is wholly without authority of law and beyond the charging Section itself.
A Division Bench of Justices Surya Prakash Kesarwani and Rajarshi Bharadwaj observed that “Definition of “tea” as given in Section 3(n) of the Tea Act of 1953 is not liable to be adopted for the purpose of the Bengal Agricultural Income Tax Act. That apart, even the definition of “tea” given under Section 3(n) of the Tea Act, 1953 does not include saplings. Thus, by any stretch of imagination or logic “tea” shall not include saplings.”
“Saplings are altogether a different agriculture produce. Sapling is a young plant which is neither known nor is used as “tea”. Tea saplings is planted in untilled soil which develops into tea bushes. After it is grown up it produces tea leaves. Therefore, we hold that saplings are not “tea” and thus are outside the scope of the charging Section 3 of the Bengal Agricultural Income Tax Act. Consequently, “saplings” are not liable to tax under the Bengal Agricultural Income Tax Act” the Bench noted.
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